Australia’s financial regulatory body has announced a consultation process regarding new regulations for the buy now pay later (BNPL) sector, set to take effect in June 2025. These updated regulations aim to enhance consumer protection while retaining the advantages associated with BNPL agreements.
The release includes draft guidance on low-cost credit contracts along with a consultation paper inviting industry input. The forthcoming regulations mandate that BNPL providers obtain a credit license and adhere to the National Consumer Credit Protection Act of 2009. This requirement emphasizes the need for providers to comply with specified rules when their BNPL offerings are categorized as low-cost credit contracts.
The draft guidance is intended to clarify the obligations for providers, including adherence to updated responsible lending standards and electronic communication of relevant materials. Stakeholders are encouraged to participate in the consultation by offering feedback on the proposed changes.
The new regulatory framework is rooted in the Treasury Laws Amendment Act, which introduces several modifications to the National Consumer Credit Protection Act. The implementation of these reforms, starting six months after the Act’s Royal Assent, will bring BNPL transactions under the same guidelines as traditional credit contracts.
Under these new protocols, distinctions will exist for BNPL offerings that qualify as low-cost credit products, allowing providers to opt for modified responsible lending requirements. This tailored approach is expected to adapt to the unique characteristics of BNPL services while still ensuring consumer protection.
Recently published information outlines the licensing requirements for those engaged in credit-related activities involving BNPL transactions, reiterating the need for compliance across various stakeholders in the market.
Overall, the regulatory adjustments reflect a shift towards greater oversight within the BNPL industry, focusing on a more consumer-centric approach while maintaining the innovative elements that this payment method offers. Stakeholders have until early March to provide their insights, making this an active period for dialogue and potential modification of the proposed guidelines.